MARLBORO — The proposal is to bring a community-owned, subscriber-funded fiber-optic telecommunications network to Windham County. The main purpose is to provide reliable broadband Internet service to homes, towns, schools, health clinics, and businesses throughout the region. The not-so-technical name for the service is “fiber to the home,” or FTTH. Telephone and television services will be available as well over this data connection.
Fiber-optic transmitters are built to send information as light pulses along a glass or plastic wire or fiber. The process is very fast. Because the hub (or central office) is rather expensive, five or six thousand services are required to break even. Network layout is less costly. This means a market potential of 15,000 or so is needed, where switching, not distance, is more the limiting cost factor than technologies like DSL. Windham County has about 18,000 housing units occupied year-round, and there seems to be interest in broadband throughout the region. Because the fiber hub can serve additional customers, many others can be added later.
The concept was reviewed by the Brattleboro Selectboard Dec. 18. The director of the Windham Regional Commission, Jim Matteau, was supportive. As recently as March 27 Town Manager Barbara Sondag said the town “will be reaching out to other communities in the County to discuss a regional approach to broadband,” and she urgently hoped the town could help realize this dream.
Vermont already has a municipally owned FTTH network operated by Burlington Telecomm. Furthermore, on this past Town Meeting Day voters in 19 towns in the eastern counties of Vermont between Montpelier and White River Junction agreed to establish a consortium for FTTH network number two, known now as East Central Vermont Community Fiber Network, or EC Fiber. Approximately 1,300 homes and businesses have already pre-registered for their fiber service.
Windham County planners have looked to Burlington and EC Fiber as models. Quite recently, however, the state seems to have suddenly frowned on the idea, despite the Governor's stated determination to make Vermont an E-State by 2010.
Governor Jim Douglas, in his 2007 inaugural address, challenged Vermont to become the first state to provide universal cellular and broadband coverage everywhere in its borders as he proposed the creation of the Vermont Telecommunications Authority.
“Vermont can become a hub for the world's most advanced software, engineering and environmental technologies entrepreneurs," Douglas said. "These entrepreneurs will form companies big and small that will be able to locate across the state and have high-capacity broadband as well as ubiquitous wireless services. The growing trend in Vermont to work at home will grow substantially, as Vermonters throughout the state will be able to work for companies across the globe via their new connections."
Douglas predicted that these new businesses and employment opportunities "will drive our economy and create new revenues for our state,” and that education, health care, safety, and communities will benefit as well.
Douglas went on to call fiber optics and wireless “the building blocks of any sort [of] long-term strategy to upgrade the telecommunications networks."
"Fiber offers nearly limitless transmission capacity, can support nearly any imaginable communications service, and the fiber lines that serve users are assets with a long useful life," Douglas observed. "Wireless offers mobility, which no other technology does, and the ability to rapidly deploy new networks. The networks supported by the Authority will be a carefully selected mixture of fiber and wireless infrastructure that will blanket the entire state.”
The legislature responded quickly. The resulting Act 79 refers both to broadband and to mobile telecommunications providers, presumably using cellular or other wireless technologies. Bonds or notes of the Authority which are outstanding at any one time are restricted to $40 million in toto, as is a separate “debt service reserve fund.” The 11-member VTA is chaired by Mary Evslin, a veteran of the telecom and software development industries. State Treasurer Jeb Spaulding serves on the board.
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EC Fiber's Web site, ECFiber.net, describes the consortium's plan as a community project to provide very high quality digital television, telephone, and ultra-high-speed Internet services to 100 percent of homes and businesses in participating towns.
These services would come at no cost to the towns, because no local bonds would be issued. Towns receive property-tax equivalent payments from the network as well as eventual profits. The venture is owned by the towns, funded by the subscribers, and operated locally.
An umbrella organization, Valley Net, brought local dial-up Internet to the area in 1994 and managed more than 6,000 customers through January 2006. Valley Net is scheduled to organize, design, build, and manage the EC Fiber configuration.
Similar community-owned local networks have been successful in Wisconsin, Georgia, Virginia, Pennsylvania, Minnesota, and Tennessee. All have long-distance network interconnection.
The business plan predicts that it would take three years to serve 25 percent of the market by offering combined services as Internet, television, and telephone.
In EC Fiber's application to the Vermont Telecommunications Authority for funding, the group pointed out that the Vermont Municipal Bond Bank would be asked to act as the funding conduit for capital lease funding and that financial endorsement from the VTA, now that it exists, would be essential for modest credit enhancement to provider banks who participate.
It will be necessary to borrow $3,200 to serve each customer. The venture would eventually require backing of $90 million, of which VTA was asked for $4 million immediately and an additional $4 million in reserve for five years to protect against unanticipated delays in market penetration. (In Burlington, fiber service areas built before 2007 already serve more than 40 percent of households.)
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On April 3, the VTA informed legislators and selectboard members in the 19 eastern-county towns that EC Fiber's financial requests would be rejected.
Executive Director Bill Shuttleworth cited the current financial market instability (which FairPoint encountered in that company's Verizon land-line takeover) and the relatively low rural density of EC Fiber's territory (as compared with Burlington's) as the two “hurdles” that precipitated the authority's action. On April 22, the VTA made the announcement public and said that EC would instead receive a $25,000 planning grant, presumably to enhance their current business plan.
Meanwhile, Burlington Telecom's 3,100 customers cover its operating costs,The company's municipal leg has already enabled schools to improve their information technology capabilities and save money at the same time.
Burlington Telecom's success comes despite challenges. Adelphia put up competitive roadblocks which stretched out the timeframe and forced BT to borrow more money. Subsequent delays ensued with lengthy pole preparation discussions with the municipally owned and operated Burlington Electric Department. After former Executive Director Tim Nulty left last fall, Jonathan Leopold, the city's chief administrative officer, hired a consultant whose chief contribution seems to have been his suggestion that the company hire a sales manager.
Still, according to Leopold, the break-even point will now come as early as December.
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The apparent quick change in attitude on the state's part puzzles folks in southern Vermont. Talk is fine, but small towns with dialup Internet need money. Loaning $4 million out of $40 million to EC Fiber so that hordes of unserved and underserved broadband users can be brought online seems exactly what Act 79 intended.
Should that money be used simply to help Verizon build cellular towers? Should FairPoint be protected from the competitive influence of modern technology? Is it right to criticize Burlington Telecom when the department and the city seem to be doing so well? After all, in 15 states incumbent providers have seen to it that municipal telecommunications departments are not permitted at all!
Bill Shuttleworth says that the governor and state treasurer “will not allow the VTA to issue any bonds, nor will the bonds be marketable, unless the revenues that support the bonds are extremely secure.” Watchfulness is certainly admirable, but with start-up ventures in a developing E-State, where the working model is succeeding so beautifully, is this a realistic approach?
At a May 21 meeting in Brattleboro to discuss county broadband and fiber options, Tim Nulty noted that the 23 east-central towns who comprise EC Fiber's territory have received three replies to their $90 million funding request for proposal.
It's a shame this is not because of a forward-looking state policy, but in spite of it.